Some financial New Year's resolutions

It's that time of year, when we feel the newness of January around the corner and the chance for a fresh start. While you're making your plans to join the gym or swear off cake, consider some financial resolutions to add to your list.

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Posted Dec. 30, 2012 at 12:01 AM

Posted Dec. 30, 2012 at 12:01 AM

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It's that time of year, when we feel the newness of January around the corner and the chance for a fresh start. While you're making your plans to join the gym or swear off cake, consider some financial resolutions to add to your list.

Here are some suggestions, organized by the five things we can do with money.

1. Organization takes time, but it's an investment that pays back in time and money when you know what you have and where it is. When I'm rushed and overscheduled it's easier to go out and buy more stuff instead of looking for it in the house. For instance, we've been accumulating leftover wrapping paper for several years and always forget about it until after we buy more. During the year we did some household organizing and stored the wrap where I would remember to use it. It came in handy and saved some money. My mom keeps an inventory list on her pantry door so she knows what's on each shelf. Especially for us vertically challenged folks, it can be difficult to see what's in the back of a closet and things can unfortunately end up going to waste.

2. Time and money both are finite resources, so when you're looking for ways to save money, choose your methods wisely. If you spend time clipping coupons, will you have the time and presence of mind to actually use them, or would your time be better used planning a menu around sales? There is no shortage of articles on money saving tips; you likely don't have time to implement them all, or implement them all well. Choose the ones that will give the most bang for the buck for your family and put your energy into those.

3. If you are carrying consumer debt, make your No. 1 resolution this year to reverse the flow. Don't let the magnitude of the problem overwhelm you to the point that you succumb and make it worse. Resolve to reverse the flow first by not charging more; treading water is not progress for sure, but you're not sinking deeper. It's hard to bail the water out of a boat while it is still leaking. When you have that under control, work on aggressively paying the debt down, with "gazelle intensity" as Dave Ramsey would say. It has to be a priority and goal for everyone in the family to work best.

4 Start or increase your automatic giving; try even an increase of 1% of your income. You may not even notice it being gone. Inch it up a little more at a time if you can. As you see your savings accumulate, you may really enjoy watching the balance grow and find a feeling of satisfaction in giving something up now to have more later.

5. Money saved by definition is money not consumed by the other four uses of money. Sometimes we could be saving but don't because it gets sucked up in other areas. So when you save money on something, actually put that money in savings. If you have budgeted $50 for a purchase but in fact find a deal and only spend $40 of it, put that $10 saved in your savings account, or even a kitty to save for something special like a fun family outing, a home improvement, or to pay down credit cards.

6. Emergency funds need to be liquid and insured, and I understand the temptation to either "bury it in the backyard" or invest it in stocks to get some sort of return. Yet, an emergency is always something unplanned, and you want to be sure to have the ability to access those funds when you need them, without worrying about where the market is that day or if the neighbor's dog dug up your stash. There are some institutions that pay a bit more interest than the pennies you may be accustomed to. Kasasa.com is a program which partners with community banks and credit unions to pay interest rates much higher than the average. They are typically tiered depending on your balance and you do have to meet account requirements like making minimum debit card transactions and direct deposits in each billing cycle. It's not for everyone, but if you can play by the rules it can earn you a little more. 7. Organization really saves money here, because a tax deduction unsubstantiated is a tax deduction lost, one, because your memory isn't as good as you might think, and two, because should the IRS question a deduction for which you have no records, you can kiss it goodbye. Start a new tax folder now to store your 2013 receipts and notes of expenses. If you deduct mileage on your taxes, resolve this year to keep up to date records of your trips as you go. After the ball drops Monday night and you've kissed your sweetheart and called your kids, run out to the car and record your odometer mileage to document the end reading of 2012 and the first of 2013. Yes, it's that important.

8. Saved the best for last. I wholeheartedly believe that giving is an integral part of financial success. It gives us perspective, keeps us from getting too attached to the "stuff" of this world, and most importantly, helps others. It's our responsibility as citizens of this earth to help each other; we cannot think that the elusive "someone else" or the "government" will take care of all our social ills. When times are tough giving is hard, no doubt. But there is always someone worse off we can help, and it's investing in the lovely intangibles of life that bring the significant returns. If we all resolve to do even a little more in 2013, imagine how much better things will be going into 2014.

Erin Baehr is a certified financial planner and owner of Baehr Family Financial, a fee-only financial planning firm in Stroudsburg (www.PurposefulMoney.com). Baehr can be reached at 570-223-1550 or at Facebook.com/YourMoneyEveryday.